As we journey through Holy Week and Easter, the LSS blog topics are following a theme of “New Beginnings”. Each day, a different department will post a relevant topic that follows the theme of the week. Check back each day for a new post. Today’s post comes from the Center for Financial Resources.
Ahhh, Holy Week. For those following the tradition in the church year, it is the culmination of 6 weeks of reflection, repentance, sacrifice, and various other not-so-joyous activities. It started with Ash Wednesday when people went to church to have someone rub ashes on their forehead (a sign of mourning) and comes to a cataclysmic ending on Good Friday when we remember Christ’s death on the cross. Really? You call that ‘good’?
It is good. It was on that Friday that Christ died to forgive our sins so that we can have eternal life in heaven regardless of our own merit or worthiness. How’s that for good? Easter is a huge celebration as it celebrates the new life, the new beginning that we have in Christ’s death and resurrection. Given our theme for this week, how do I connect that to financial wellness? Well, here we go….
The church spends 6 out of only 52 weeks in a year focusing on how much and why we needed Christ to die for us. At times, that can be quite crushing. There are, unfortunately, a lot of crushing aspects of life that can overwhelm us. Personal finances are no different. Sometimes our financial trouble is due to events outside of our control. More often, if we are being honest with ourselves, our financial troubles are due to our own poor choices and lack of diligence. In short, we have just screwed up.
Depending on the extent of a person’s trouble, it can seem too much to overcome. There may be medical debts, credit card debts, payday loans, a bad mortgage, late payments, collections, judgements, garnishments, foreclosures, repossessions, closed accounts, and so much more before even mentioning the damage to our credit report and score. In financial terms, all of that is the Lent. It is our time of mistakes, mourning, and realizing the need for a new start.
“A new start?” you ask? The church calendar has Easter. In the financial world, bankruptcy may be your comparable new start. Before the stigma of bankruptcy scares you, allow me to explain more.
In the church calendar, we then have Holy Week at the end of Lent in which we celebrate the Passover (Last Supper) and Christ’s death. The bankruptcy process can be much like this final week of sorrow and mourning. You will have to examine and be examined. You will have to identify and own all of the issues that plague you. This part of the process will involve the bankruptcy court, trustee, financial counseling, and education. It will also cost you. The average cost of filing bankruptcy in South Dakota is around $2,000. It may seem like a high price to pay, but the end results may well justify the cost.
Once you complete the bankruptcy process and reach the final discharge, this is like that big celebration on Easter Sunday. It is your financial resurrection of sorts – your new beginning. Now free from those debts discharged in your bankruptcy, you are free to move forward responsibly and begin rebuilding and expanding your credit. With that restart can come a huge reduction in stress, more disposable income, and even new financial opportunities. It can truly be a financial new beginning for you.
Here are some of the basics of filing bankruptcy:
There are two types of bankruptcy that consumers will file –
- Chapter 13: This is referred to reorganization bankruptcy. In Chapter 13, you disclose all debts and income and then the court and trustee decide on a payment plan. You will make regular payments for 3-5 years and any debt remaining is discharged.
- Chapter 7: This is referred to as ‘straight bankruptcy’ or ‘liquidation bankruptcy’. There is no repayment plan with a Chapter 7, but the courts will sell the bulk of your assets and use the proceeds to pay what debts they can. The rest of your debt is then discharged. Some assets are protected, such as a certain amount of value in your vehicles and your home.
Filing bankruptcy will hurt your credit report and score….. temporarily. It will be difficult to obtain any credit immediately after filing bankruptcy. By filing, you also eliminate the past debt that is continuing to damage your credit and you will get to a point in which you can at least begin to heal financially. If you are in serious enough debt and do not file bankruptcy, your credit will probably continue to spiral downward anyway.
It’s pretty much impossible to find a new beginning as perfect as the one we have in Christ. As such, not all debts can be discharged through bankruptcy. Child support, certain tax debt, restitution, and most student loans will not go away with bankruptcy. This is why bankruptcy is not the best option for everyone. If you have other debt that can be discharged however, taking care of those through bankruptcy may free you to deal with those debts that cannot be discharged.
In this time of year that focuses on new beginnings, take a moment to decide if you need a financial new beginning as well. Bankruptcy isn’t even your only option to get back on track. If you would like someone to look at your unique situation and talk through your options with you, the counselors at Center for Financial Resources would be more than happy to help. They have seen it all from the depths of despair to the fresh breath of a new beginning. Through our Debt Management Plan, we had a client who paid off $90,000 in debt in 5 years. Now that is a new start.
Curious to know more about your options for a new start? Give us a call. We have counselors in seven locations across eastern South Dakota and can counsel by phone if needed. Start your new beginning. Give us a call.
written by Breck Miller
image courtesy all-free-download.net